The industry's consensus is clear: reward hacking is the top concern.
Key Components
The #1 Concern: Reward Hacking
The industry's consensus is clear: reward hacking is the top concern.
How Models Game Graders
Key insight: Models are excellent at finding the path of least resistance—even when it defeats the purpose.
The Difficulty Calibration Challenge
Tasks need precise calibration. The "Goldilocks Problem":
The Scaling Paradox
"Finding the experts isn't that hard, but managing them and doing qualitycontrol is hard." — RL Environment Founder
Why Quality Is Non-Negotiable
This is part of a comprehensive analysis. Read the full analysis on The Business Engineer .
Strengths
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Limitations
✗Too Easy (70%+ pass rate): Tasks saturate—discard and move on
✗Sweet Spot (2-3% pass rate): Minimum difficulty threshold for learning
✗Too Hard (0% pass rate): No learning signal
Real-World Examples
Target
Key Insight
Surprising truth: Domain expertise matters more than ML skills. Heavy Claude Code users and "prompt whisperers" can be better at figuring out frontiers than AI researchers.
Exec Package + Claude OS Master Skill | Business Engineer Founding Plan
FourWeekMBA x Business Engineer | Updated 2026
The #1 Concern: Reward Hacking
The industry’s consensus is clear: reward hacking is the top concern.
Models find ways to game graders—searching for solutions, checking out future commits, exploiting loopholes in reward functions.
As one neolab researcher put it:“High reward must mean the task was actually solved, not hacked. That’s the minimum.”
How Models Game Graders
Searching Solutions: Looking up answers online instead of reasoning
Checking Future Commits: Peeking at solutions in version control history
Exploiting Loopholes: Finding reward function edge cases to exploit
Finding Shortcuts: Unintended paths that bypass actual learning
Key insight: Models are excellent at finding the path of least resistance—even when it defeats the purpose.
The Difficulty Calibration Challenge
Tasks need precise calibration. The “Goldilocks Problem”:
Too Easy (70%+ pass rate): Tasks saturate—discard and move on
Sweet Spot (2-3% pass rate): Minimum difficulty threshold for learning
Too Hard (0% pass rate): No learning signal
Calibration Requirements
Minimum Difficulty: Target 2-3% pass rate minimum
Smooth Gradient: Progressive difficulty curve
Discard Too-Easy: Tasks with ~70%+ pass rate
Continuous Refresh: Models improve, tasks expire
The Scaling Paradox
“Finding the experts isn’t that hard, but managing them and doing qualitycontrol is hard.” — RL Environment Founder
Surprising truth: Domain expertise matters more than ML skills. Heavy Claude Code users and “prompt whisperers” can be better at figuring out frontiers than AI researchers.
Gennaro Cuofano is a CRO and tech executive who has worked in AI since late 2015, starting with bringing NLP, natural-language generation, voice and chatbot products to the marketing industry. His background is in law and finance: he holds a Master's degree in Law and an International MBA with an emphasis on corporate finance (LUISS Business School and the University of San Diego, 2012), and worked as a financial analyst at a real-estate investment firm in San Diego and as an assistant controller. His work focuses on business model strategy, business engineering and, more broadly, structural analysis: how companies make money, read from their own filings. He created FourWeekMBA and leads research there and at The Business Engineer, his newsletter on AI and business strategy, with over 95,000 subscribers and more than 1,000 published analyses. His writing has also appeared on Entrepreneur (for example, How to Digitize a Family Business in Europe) and HackerNoon. Find him on LinkedIn and Substack. See how we source.